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Brenntag, the German chemical distribution portfolio company owned by private equity firm Bain Capital, is close to having its credit rating cut by rating agency Standard & Poor's on concerns over a planned â¬3.25bn ($4.1bn) secondary buyout by BC Partners.

The agency has put the long term rating on negative outlook, which means the company could be on the verge of being downgraded.

S&P said: "The credit watch placement reflects our concerns that Brenntag's financial risk profile might no longer be adequate for the B+ rating following its acquisition."

The B+/B- rating on Brenntag's senior secured €1.54bn bank loan and €305m subordinated second-lien loan, which involves a junior form of debt, may also be downgraded, according to S&P.

Private equity firm BC Partners agreed the buyout for Brenntag earlier this week. It will be Germany's largest leveraged buyout to date.

The deal would top the €3.1bn paid by private equity house Blackstone for German chemicals company Celanese in April 2004, and is BC Partners' first investment in the country for more than three years. Its last deal was the €510m purchase of cable operator TeleColumbus.

Eve Greb, a credit analyst at S&P, said: "We will discuss the effect of the change in ownership on Brenntag's business strategy and financial risk profile with the company's management in the near future, with a view to resolving the credit watch status."

Bain paid €1.4bn for Brenntag and sister company Interfer less than three years ago and has increased sales from €4.3bn in 2003 to €5.3bn in 2005. In May, the company bought UK and Ireland distributor Albion Chemicals Group, and Swiss business Schweizerhall Chemie.